Spot gold prices are seeing only marginal consolidation this morning, as the market retains most of Friday’s gains. Gold futures, which settled $7 higher than spot gold, have given back nearly half of Friday’s gains. Spot silver is up modestly this morning, to match Friday’s futures close.
Gold futures gained nearly 3% for the month, boosted by downbeat US economic data. December gold rose Friday by $16.30, to settle at a three-week high of $1,357.50. September silver futures grabbed an extra 15 cents to close at $20.35 an ounce. Silver contracts gained 3.3% for the week, and logged prices 9.3% higher to end the month of July.
The dollar is rebounding from a one-month low, causing some headwinds for precious metals and other commodities. The stronger USD is reinforcing negative sentiment in oil futures, as WTI shorts are the highest in history. WTI is down 2% in early trading, falling below the $41 mark. Brent crude futures are also down 2%, below $43 a barrel. Crude oil markets had a rough month in July, falling nearly 15% — the worst monthly loss for WTI in a year. Even though crude oil is now in a new bear market (prices more than 20% lower than the most recent peak), prices are still up more than 50% from the mid-$20 dollar range in the first quarter.
Friday was the last trading day of the month, with heavy volumes in equities markets. The S&P 500 hit a record intraday high, but was unable to hold on through the close. The S&P and Nasdaq closed marginally higher, while the Dow was marginally lower. The Dow lost 0.75% for the week, but gained 2.8% for the month. The S&P 500 lost a minuscule 0.07% on the week, but was 3.6% higher for the month. The Nasdaq was the big winner in July, recording a 1.2% gain for the week, and a 6.6% gain for the month.
The big miss in second quarter GDP hit bank stocks and the dollar Friday. The initial report put US economic growth at 1.2% for the three months ending June, against a GDPnow forecast of 1.8% and a median estimate by economists of a 2.5% gain. First quarter economic growth was revised downward, back to a 0.8% reading from 1.1%.
The initial opinion is that the abysmal GDP print will tie the Fed’s hands regarding a September rate hike, with the odds on the CME Group’s FedWatch tool this morning showing a scant 12% probability that rates will rise in September. The November FOMC meeting occurs just 6 days before the Presidential election, so that date is strictly off-limits.
The British pound sterling ended in the red for the third month in a row, as a rate cut and/or stimulus to combat economic slowdowns caused by Brexit is all but certain to be unveiled at the Bank of England policy meeting this Thursday. Weaker than expected stimulus measures announced by the Bank of Japan on Friday led to a rally in the yen.
Treasury yields fell Friday to their lowest level in almost three weeks, as investors snapped up bonds. (Yields fall when prices rise, and vice versa.)
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